How to Stake Cardano (ADA): Best Crypto Staking Sites
Have ADA sitting on crypto exchanges or wallet? You can earn more ADA on your holding. In this post, we are going to learn the what is ADA staking, risks involved, and best platforms to stake ADA. Cardano was...
Have ADA sitting on crypto exchanges or wallet? You can earn more ADA on your holding. In this post, we are going to learn the what is ADA staking, risks involved, and best platforms to stake ADA.
Cardano was developed by Charles Hoskinson, one of the co-founders of Ethereum in 2015. It is a smart contract building platform where one can build decentralised apps or dApps. ADA is the native token of Cardano. If you’ve ever wondered about how you can make a little extra income with your crypto funds, then staking might just be the answer for you. Staking Cardano’s ADA token can be a great way to earn more out of your crypto assets provided you do it correctly.
Hence in this article, we will cover everything you must know about Cardano Staking, and which platforms allow you to stake ADA and can bring the best returns.
What is Staking?
Let’s first understand what staking is in general.
For staking, certain holders of the token are chosen to act as validators, The responsibility of a validator is to approve and verify new transactions that will be then added as blocks to the blockchain.
In order to become a validator a user must have “staked” or locked in some amount of the tokens. The chances of binge being chosen as a validator increase with an increased amount of the coin deposited for staking. The validators also known as stakers in the end receive rewards for this
What is Cardano (ADA) staking?
Every cryptocurrency works on a particular consensus mechanism which is either Proof of Work (PoW) or Proof of Stake (PoS).
Cardano works on a Proof of Stake mechanism where the blockchain uses validators to work together for the best interest of the network. The selection of validators is done through the use of an algorithm
Since ADA works on the Proof of Stake mechanism to verify the transactions, staking of ADA plays a very important role. Not only does this mechanism efficiently uses energy resources without causing much impact on the environment, but it also is more comprehensible by users and thus allows more people to participate.
How does Cardano Staking use delegation?
Staking has been simplified on Cardano through the medium of delegation. Users can allow “stake pool operators” to perform stalking of ADA on their behalf. Everyone who chooses a specific operator has their funds pooled together and the staking is then managed by experts who have all the necessary knowledge, equipment and hardware required for efficient staking. The unstaking and restaking of a token can be done multiple times, however the waiting period is extended up till this next epoch. Once the epoch passes you will have your tokens relocated.
An epoch is nothing but a time division by Cardano. An epoch usually lasts for 5 days and consists of 432,000 slots, each of which is around one second. Snapshots at the end of each epoch are used to track the allocation of staked ADA to those who were a part of the pool and based on this the regards for each individual is calculated.
Delegation is provided by using the Ouroboros protocol that Cardano employs. Cardano is most likely the most secure, Proof of Stake (PoS) blockchain protocol and this protocol is designed to protect the user’s ADA from any access by a stake pool operator or a member.
Prior to staking ADA, it is essential to know which staking pool and staking wallet to choose.
Who should stake ADA?
Anyone who believes in the Cardano ecosystem and does not wish to trade their ADA and plans to hold it for a long term, can stake ADA. Staking ADA tokens would allow them to earn interest.
Only if you plan to hold ADA for long term you should stake ADA.
Now let us see how you can stake ADA to learn interest.
How to stake ADA tokens?
There are mainly 3 ways to stake ADA tokens:
- Staking on CEFI exchanges
- Staking through a wallet
- Lending through a CEFI/DEFI platform.
How to stake ADA tokens through wallets?
Now let us have a look at how to stake ADA through wallet step by step:
Step 1: Buy ADA Tokens
Purchase ADA tokens from a suitable crypto exchange such as Coinbase or Binance. Register for a new account if you do not have an account with a crypto exchange. Provide the basic details, confirm your contact details and complete the KYC procedure. After which, proceed to buy a sufficient amount of ADA tokens that you wish to stake.
Step 2: Choose a staking wallet
Popular staking wallets that support Cardano (ADA) staking are:
- Daedalus Wallet (Desktop) : It is a full node wallet with Hardware Wallet Integration.
- Yoroi Wallet (Browser extension, Mobile)
- AdaLite (Web Wallet)
- Ledger Nano S Plus (Hardware wallet)
Now that we know the wallet, let us send the purchased ADA to the respective wallet.
Step 3: Transfer the ADA tokens to the wallet
Transfer the purchased ADA tokens. Make note of the wallet address, an incorrect entry of the wallet address can result in a huge loss of funds.
It is recommended to initially execute a small deposit ( around 10 ADA), to ensure that the transfer can be completed successfully without any issues, and then complete a second transfer to move the remaining tokens.
To transfer the tokens to the wallet, make sure that you have access to :
- The withdrawal page on the exchange for the ADA tokens that you hold.
- The Deposit or Receiving Address of your chosen staking wallet.
Step 4: Choose a Cardano staking pool for delegation
Once you have a sufficient balance in the wallet, navigate to the Delegation List tab. From the Delegation List tab, you will be allowed to use the search bar for searching up specific Stake Pools or you can choose to arrange them with the “sort by” option. A Score sorting feature is offered which provides a list of Stake Pools with open Pledge space as well as low to high costs.
Once you decide on which Stake Pool you wish to choose, tap on the “DELEGATE” option visible on the right side, just next to that pool. After which a prompt will appear on the screen. Make note of how the fixed fees is viewed and is deducted from the total amount.
Enter your wallet password, which you set earlier. Note the wallet password is neither the wallet’s private keys nor the seed phrase. Confirm the transaction and click on “Delegate” again.
How to choose a staking pool for ADA?
Cardano Staking Pools levy a Fixed Cost (ADA fee) on initial delegations, paired with a Margin (a percentage of the fee) on the staking rewards. The greater the pledge of a stake pool, the higher the rewards generated.
The highest reward scenario occurs only if the staking pool can maintain a total balance of 1/500 of the total eligible ADA tokens being staked, this is known as the Engaged Balance. Anything lesser than 1/500th of this balance in the Stake Pool means that delegators will receive fewer rewards.
The number of desired validators is usually five hundred, and this represents a parameter known as “k.”
Obtaining information regarding the desired number of validators and optimal balances provides a view of how the Cardano network is trying to balance out the number of validators by outlining this optimal network condition.
Terminologies you will find associated with the stake pools
While looking at the stake pools you will be given a lot of information that may be important in choosing the right staking pool. However, the technical jargon may be a little difficult to understand and incomprehensible. Some of these terms are:
- Return of ADA (ROA): Return of ADA is just what the name suggests- the interest rate.
- Share/Pool Size: The Share/Pool Size shows what amount of ADA is in the staked pool and how filled to the maximum capacity it is.
- Costs: The costs represent the fees of two kinds, a tax percentage that you’ll be charged personally and a fixed rate that the entire pool will be subjected to.
- Pledge: A Pledge is nothing but a representation of the money that pool operators have themselves staked in the pool. This also in a way highlight whether they have their skin in the game or not.
- Blocks: It is simply the number of blocks minted in the entire history of the particular pool.
Step 5: Have a look at your dashboard
Visit the dashboard again and once the transaction has been confirmed, the user can view their total delegated balance. Users can also view any statistics regarding upcoming and pending rewards. The delegated staking pool can be reviewed as well.
When the user withdraws their rewards, they have the option to de-register the staking key. Choosing to keep the staking key will allow the user to withdraw the rewards and continue delegating to the same staking pool.
De-registering the staking key will give the user their deposit back to them and remove the delegation of the key from any pool, this is how users can “un-delegate” their stake.
Where can you find these ADA wallets?
You can find the recommended wallets on the following links
- Daedalus – Cryptocurrency wallet
Yoroi – Light Wallet for Cardano
AdaLite – Cardano Wallet
Ledger Hardware Wallet – State-of-the-art security for crypto assets
Check the entire list of Cardano wallets here.
How To Stake ADA Tokens using Exchanges?
A lot of really popular platforms provide users with the ability to stake Cardano. The stalking of an exchange is efficient and simple. Let’s take the example of Binance for now. Follow the given steps to stake ADA through Binance.
- Buy enough amount of ADA tokens using the Binance Spot wallet.
- Visit Binance’s Locked Staking page.
- Select a lock term, the shortest of which is 15 days and the longest of which is 90 days.
- Click on “Stake Now.”
Where to stake ADA? Top 5 platforms for staking ADA
Max APR: 10.90%
Staking Cardano was first introduced on Binance in February 2021. Based on the time for which you would lock your ADA, APR would vary. The estimated staking reward is highest (10.90%) when you lock it for a minimum of 120 days. For 90 days, the APR is 6.50%. Similarly for 45 days, it is 4.65% APR and 4.31% when you stake it for 30 days. For anything else, you use the flexible option where the tokens can be unlocked anytime, and you can earn 2%APR.
The flexible rate for staking Cardano on Binance is only 2% APY, however, Binance is a suitable option for investors or traders who are seeking short term rewards, and hold the asset simultaneously on the trading platform. A minimum of 1 ADA token is required to begin staking on Binance, with up to a maximum limit of 500,000 ADA tokens for staking.
The advantage of staking ADA tokens on Binance is the accessibility offered for the platform’s other features, products and services, which does not require transferring the coins to another wallet address. Earlier Binance.US did not allow Cardano staking. However, it was announced on 31st August 2022 that will also let users stake ADA.
The benefits of choosing Binance as a platform for staking Cardano are the attractive staking rates, the flexible rate, the lock-in options and the capability to maximize the ADA staking rewards by utilizing other financial products and services available on Binance.
Max APR: 6%
Kraken is another globally popular crypto exchange that allows staking Cardano. It is a great option for beginners who might find staking a bit complicated.
On Kraken, there are no waiting periods or fixed terms for staking. Kraken’s estimated staking incentive for Cardano ranges from 4% to 6% APY. The return on investment for staking Cardano on Kraken is very generous under a flexible arrangement when compared to other exchanges such as Binance or KuCoin.
ADA staking rewards are paid out on a weekly basis, these rewards can either be withdrawn or transferred from the Kraken staking wallet to the spot wallet to trade for other coins. These rewards are paid on Monday, Starting at 01:30 UTC. Apart from just ADA, Kraken also provide staking options for many other coins.
One of the benefits of staking ADA on Kraken is that there is no lock-in contracts and investors can easily earn one of the best staking returns for ADA without a lock-in duration.
Max APR: 1.5%
Investors that are using the KuCoin digital currency exchange can access Pool-X for staking coins, to generate relatively stable profits. KuCoin offers flexible staking for the Cardano network with an estimated return of 1.5% per annum.
When compared to Binance which offers a yield of a minimum 0.5% under a flexible term, staking Cardano on KuCoin generates a greater return on investment. Apart from ADA, Kucoin also provides for staking when it comes to tokens like ATOM, TRX, ZRX, IOST. It is available as both a mobile app and a website on browser.
KuCoin is a great option for experienced traders. It is suitable for investors who wish to earn passive income via staking, in between trading. A disadvantage of using KuCoin for staking ADA is the lack of fixed-term options for locking in the ADA tokens, either for 30 or 60 day periods is unavailable, which results in earning higher returns.
Max APR: 2.6%
The CEX.IO staking platform allows users to raise their holdings by staking coins such as Cardano on a CEX.IO account and earn passive income. CEX.io helps you easily convert fiat currencies to digital crypto assets, which makes the platform a great option for both amateurs as well as veterans in the field. Once the ADA tokens are purchased or transferred to the exchange for staking, the rewards are automatically added to the user’s wallet balance. In today’s time, it is one of the Best Platforms to stake ADA.
CEX.IO offers an estimated staking reward of 2.6% annually, which can be withdrawn by the investor at any given time. There are no lock-in periods that allow the users to trade the coins on the exchange. The minimum holding of the token is set at 10 ADA.
The staking rewards for ADA are calculated every hour and are sent to the user’s account, once a month. This is a demerit as several other staking platforms including Binance, offer payouts on a daily basis and the rewards can be used for trading or transferred to a personal hardware wallet as well.
Max APR: 5%
Being one of the top multi-asset digital trading platforms in the world, Uphold is a secure and trusted option for staking ADA. It has a huge variety of cryptocurrencies to choose from. The estimated APY (annualized percentage return) for staking Cardano is around 5%.
There is currently 15% commission on levied any staking rewards by Uphold. Staking rewards are paid out by the platform every Thursday. For the ADA token the Minimum Stake/Unstake (Per Transaction), currently is 1 ADA and the Maximum unstaking limit (Per Week) is 150,000 ADA.
Rewards and Profits for staking ADA
To obtain staking rewards, users are required to delegate their ADA holdings to any of the authorized Cardano stake pools, that are available in their wallet’s delegation centre.
According to ADAtainment | Cardano ADA Staking Calculator in the best case scenario staking 1000 ADA can get you 0.82 ADA per epoch or 59.63 ADA per year. In a probable worst case scenario this figure drops to 46.31 ADA annually.
The returns on Cardano staking invariable depend upon the fees of the staking pool, the saturation of the pool with participants and how many successful block proposals by the block.
As a reward for delegating their ADA, participants involved in staking Cardano ADA are eligible to earn a source for passive income, in the form of additional ADA, when their delegated pool validates a block. The ADA Cardano staking model allows everyone who holds ADA as part of their crypto portfolio to contribute and at the same time benefit from it.
Users are not required to claim their Cardano staking rewards as they are automatically distributed, accordingly. Rewards are earned at the end of every epoch, and the user’s balance might take around 5 days to be updated. Note that, there will be an initial delay, until they begin to notice the rewards to appear.
The process of staking Cardano is relatively easy. The attractive low fees on Cardano paired with the fast paced confirmation times make this process, enjoyable thoroughly. It is integral to be aware of the epoch time frames to estimate when you can expect to receive, your upcoming staking reward.
The platforms mentioned above are suitable for crypto investors of all levels. They are easy to use as well as access.
Storing the ADA tokens in hardware wallets for added security and control is highly recommended.
Risks conjoined with Staking ADA
Nothing in crypto is absent of its own risk, and you just be aware of them all in order to be safe. The major risk attached is that if the token value drops to zero, you could lose a lot of funds. Interest rates could fluctuate and the delegated ADA cannot be used while it’s locked up.
Having said that, Staking Cardano is considered to be moderately safe with absolutely no or very little risk of losing ADA tokens, but make sure you are using a reputable wallet. However, if the exchange gets hacked or shuts down, you may lose your ADA tokens.
The Cardano wallet can be split into two separate addresses one for spending and the other for staking. ADA coins that are delegated to the staking address must remain in the wallet to earn staking rewards and thus stays in the owner’s control at all times.
Staking ADA: FAQ
Can you lose ADA while staking?
Yes, you can lose all your ADA when you stake it with a centralised exchange. If it gets shut down, or files bankruptcy, you may lose your locked assets. There are many examples: FTX Collapse, Blockfi shutting down etc.
Can you lose ADA while staking on decentralised platform?
There is a chance of the smart contract getting hacked, and in this case, you may lose all your staked ADA.
Which platform gives best return on staking ADA?
Binance provides best return on ADA staking when you stake it for atleast 120 days.
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